New prevailing wage law puts Californian ISPs and broadband upgrade projects at risk

03 October 2014

Assume that any broadband construction work done in conjunction with a subsidy from the California Advanced Services Fund on or after 1 January 2015 has to comply with prevailing wage laws. Including the obligation to comply with a mountain of rules and paperwork. A new law approved by Governor Brown on Tuesday is very specific: CASF subsidies turn infrastructure builds into public works projects, which have to comply with union pay scales and rules.

Existing law has an exception for “work done directly by any public utility company pursuant to order of the Public Utilities Commission or other public authority”. One of the questions that needs to be answered is to what extent, if any, this clause overrides the otherwise clear statement in the new law that “public works means…infrastructure project grants from the California Advanced Services Fund”. There might or might not be wiggle room for work done by a company’s own employees.

Another can of worms is whether companies that have already received grants and loans are liable in any way for work done before the end of 2014. The marquee argument made by the bill’s author, sponsors and supporters was that a ruling made last year by the department of industrial relations regarding one particular project settled the matter, and all it does is end any argument. Which leaves open the possibility that a trade union could file a claim against an ISP for work already done. And that prevailing wage compliance and documentation obligations extend from the start of work, and not the new year. That’s another question that’ll be wrangled over the coming months: don’t assume you’ll like the answer.

Imposing union wage scales and work rules mean higher costs, often double open-market pay rates. Someone has to pay for it. More about that Monday.